China Service Company Formation
China Service Company Formation is also called China Service Company setup, China China Service Company registration, China Service Company incorporation and China Service Company establishment. If some of the overseas companies would like to do import and export business in China, then a China Service Company is necessary for establishment.
China Service Company Formation-Business Scope of China Service Company
According to WFOE regulations, "Foreign investors are permitted to setting up a 100% foreign owned enterprise in industries that are conducive to the development of China’s economic benefits, and not prohibited or restricted by China government." In China, Business scope of a business is a "one sentence description" covering all of the present and future activities of the WFOE; it is essential this encompasses every envisaged scope of future activity. The WFOE can only conduct business within its approved business scope, since April first of 2014, the China Centre government carried out one new policy to relax the restriction in the business scope, Generally business scope includes investment consulting, international economic consulting, trade information consulting, marketing and promotion consulting, corporate management consulting, technology consulting, manufacturing, etc. After China's entry into WTO, more and more business is open to WFOE especially in Trading, Wholesale and Retail business, check the Catalogue of Guidance to Foreign Investment.
China Service Company formation-Registered Capital of China Service Company
Registered capital of China Service Company is the amount that it's required to run the business until it can break even - the 'registered capital' is a guideline only. Although the head of China’s State Administration of Industry and Commerce (SAIC) announced in April of 2013 that the registered capital is greatly lowered to registered a WFOE in China, but if you do looking for a minimum registered capital, for instance RMB 30,000 (which is impossible to establish a WFOE in China) this means you will run out of money pretty soon, which leads to increased costs in reapplying for permission to increase capital, additional licensing fees and renewals of business licenses and so on. The WFOE needs funding via it's registered capital until it's about to support itself from it's own cash flow.
Initial Paid-up would be 20% of the registered capital, the balance should be remitted within 2 years, or it would be 100% of the registered capital to be paid-up within 6 months of the business registration license issue date.
China Service Company formation-Advantages of China Service Company
The advantages of incorporation a Service Company, compared with other types of enterprises, include, but not limited to
1) Independence and freedom to implement the worldwide strategies of its parent company without having to consider the involvement of the Chinese partner;
2) Ability to formally carry out business rather than just function as a representative office and being able to issue invoices to their customers in RMB and receive revenues in RMB;
3) Capability of converting RMB profits to US dollars for remittance to its parent company outside of China;
4) Protection of intellectual know-how and technology;
5) Full control of human resources
6) Greater efficiency in operations, management and future development.
China Service Company formation-Office address of China Service Company [Very important]
Before submit the application forms of forming a Service company in China, the foreign investor must rent a plant (manufacturing WFOE) or an office in advance, the office of WFOE can't be in a residence building, it should be commercial office building, Both residence and commerce (R&C) combined building and Virtual address is also able to register a Service company in China main cities. But if the Service company needs to apply for special permission license or employees’ working permit, then a normal office building in China for register a WFOE is a must. The minimum area for the China WFOE registration is 30M2; it should be bigger for the area if some special license such as food circulation license needs to be applied. Tannet will recommend our clients to take the commercial building office for the China WFOE registration in the future prospect.
China Service Company formation-General Tax Information of China Service Company
Since Jan. 1, 2008, China's new corporate income tax rates begins with 25% although some industries still enjoy a lower rate which is15%, the rate depends on the places where the company is registered and the industry that a company engaged. Please check the latest Corporate Income Tax Law of China above. All enterprises are required to report to the Tax Administration Department monthly, quarterly, annually. Path To China provides part time accountant service for our clients, you are welcome to contact us for more information.
China Service Company Formation-Annual Audit Report of China Service Company
Any limited companies in China should summit annual audit reports to the relevant authorities. The audit reports are including: balance sheets and income statements for their annual Chinese audit. The annual audit and licenses renewal cost is about RMB 6,000. Any company will be subject be to a fine if the Annual Audit Report is not submitted in a timely manner. (June 30th is the deadline of an annual audit report submission and licenses renewal in China)
China Service Company Formation-Profit Repatriation
China Government allows Foreign Invested Enterprises remit their profits out of the country and such remittances do not require the prior approval of the State Administration of Foreign Exchange (SAFE). Dividends cannot be distributed and repatriated to oversea if the losses of previous years have not been covered while dividends not distributed in previous years may be distributed together with those of the current year. Repatriating the Registered Capital to home countries is forbidden during the term of business operation.
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